National / Crime & Legal

Labor game-changer? Supreme Court smacks down illegal gaps in allowances paid to regular and nonregular workers

Kyodo

In a pair of rulings that could affect the government’s labor reform drive, the Supreme Court on Friday found illegal differences over the corporate allowances paid to regular and nonregular employees.

According to the labor contracts law, “unreasonable” disparities between regular and nonregular workers are banned.

Friday’s rulings were the Supreme Court’s first on the labor equality issue. Similar lawsuits have been filed nationwide seeking equal treatment regardless of employment status.

The top court’s Second Petty Bench on Friday handed down sentences on two separate cases — one filed by three fixed-term employees rehired as truck drivers after reaching retirement age, and another filed by a fixed-term truck driver.

The plaintiffs insisted they were unfairly treated in terms of wages and benefits compared with regular employees.

On the case regarding three employees hired by Nagasawa-Unyu, a transport company based in Yokohama, the Tokyo District Court ordered the company to pay the same level of wages as regular employees in May 2016. But the ruling was overturned by the Tokyo High Court in November the same year on the grounds that it is “socially accepted” to offer lower wages after retirement.

The other case involved differences in benefits contested by a truck driver at Hamakyorex Co. based in Shizuoka Prefecture.

The Hikone branch of the Otsu District Court concluded in September 2015 that unreasonable differences existed in the commuting allowances. In July 2016, the Osaka High Court found unreasonable the payment of three more types of benefits in addition to the commuting allowances, and ordered the company to pay ¥770,000 ($7,050) to the workers.

The government is pushing for a set of labor reforms to boost productivity to make the most of the country’s shrinking labor force, which includes ensuring equal treatment for regular and nonregular workers.

According to government data, nonregular workers, such as part-timers and temporary staff, account for about 40 percent of the nation’s workforce.

While regular employees are usually hired until they reach retirement age, many nonregular workers are left in a relatively unstable working condition with labor contracts of short duration.

Nonregular workers have been on the rise in Japan since the bubble economy imploded the early 1990s. This led companies to recruit fewer regular workers to cut costs in the late 1990s to the early 2000s, a trend that accelerated quickly when the 2008 global financial crisis unfolded.